The Investor Visit

“Not long now! It’s just over this hill!” Fred exclaimed. Even against the car’s noisy engine and grinding wheels, the stock promoter’s excitement was apparent.

“I hope your hunch is right, Fred!” Graeme yelled as he gripped the shuddering steering wheel of his late-model Chalmers-Detroit. “I’m already sold on the future of oil, but out here in this wilderness?!”

“I think you’ll be impressed with the operation, Graeme,” Fred replied confidently.

It was a glorious summer day in the Canadian Rocky Mountains. Graeme had taken off the car’s top, unrolled the windows and removed its front windscreen. He’d figured they may as well enjoy the ride before they got down to business.

Sitting beside their respective husbands, Amy and Esther clung to their hats lest they blew away. They’d expected a relaxing day trip in Waterton Lakes National Park, not this dusty drive to a drilling rig. Regardless, they were determined to make the most of it.

Suddenly, Fred lurched forward from the back seat. “There’s the rig now!”

Graeme kept his eyes on the last turn in the road, but Amy and Esther looked to where Fred was pointing.

The Original Discovery Oil Company operated this site near Waterton, Alberta, from 1914 to 1920. To the left of the rig is a car full of visitors. In the bottom right, two men who likely worked there.

“Well this certainly isn’t beautiful Waterton Park, is it, Graeme?” Amy muttered to her husband.

As they crested the hill, Graeme surveyed the discouraging view himself. In the valley below, a tilted smokestack belched black clouds and barrels were strewn around the site.

Fred giggled as Graeme maneuvered his car to the rig, cranked the safety brake and cut the engine with a flourish. He’d used the gains of his last two oil investments to buy it and was still smug about the purchase.

Up ahead, a man waved at them.

“That’s the photographer,” Fred explained, hopping out of the car. “He’s photographing the property to show other investors how their money’s workin’ for them. Let’s give him a handsome shot.”

With that, Fred crossed his arms and struck a pose. The others remained where they were, faces grim, trying to ignore the dull pounding of the drilling rig’s steam engine.

After tensing their muscles for what seemed an eternity, the group was relieved when the photographer sprung from behind his black velvet camera hood. Hands cupped to his mouth, he shouted, “Thank you! All done!”

Thus, a fleeting moment in the summer of 1915 was captured for posterity.

ZOOMING IN ON A CLASSIC

I found the photograph of these four day-trippers at an antique fair in the early 2000s. The print was in rough shape. Mounted on black cardboard that had obviously had a decades-long love affair with dust, it was poorly exposed and cracked around the edges.

Nonetheless, nostalgia drew me to that image of the wooden derrick perched awkwardly in a southern Alberta valley. Recognizing a classic energy vignette, I bought it immediately.

Years later, I made a high-res scan of the print and spent hours restoring it. As I zoomed in to every nook and cranny, I reflected on the environmentally challenging scene — the barrels littering the site, the coal-black smoke drifting down the valley.

In contrast, the well-appointed visitors look out of place, dressed more for a picnic in a Henry James novel than a visit to this drilling rig in the middle of nowhere. Who were these people and what circumstances brought them there that summer day?

Times and technology have changed since “Graeme” and his entourage paid their visit, but savvy investors will still do well to learn as much as they can about a prospective investment.

“Graeme,” said Fred, “you made your fortune in Alberta coal, but I’m tellin’ you the future’s oil. Every wheel in the world is gonna turn with the stuff. Just wait, you’ll have a smile from here to Texas once this here well starts gushin’.”

Years of investing had made Graeme shrewd. Recognizing the shift to folksy patter, he walked a few paces before responding to Fred’s rehearsed hyperbole.

“I already told you, you’re preaching to the choir.” As if to underline his point, Graeme kicked a rock. “I know more folks are getting rid of horses and buying automobiles. Meaning more lubricants, more oil for fuel. Why the devil d’you think I bought shares in this company you’re promoting?”

“You got it, Graeme!” Spying an opportunity, Fred pounced. “I sure wouldn’t wanna be a chump raising horses now. Or how about making horseshoes?” He shook his head and whistled through his teeth. As they approached the great steam engine, Fred continued his sales pitch. “Besides oil and autos, the future is gas-pumping devices, stations to cater to travelers.” He added cryptically, “You might be interested in other deals I’ve got cookin’ …”

Between Fred’s promotional babble and his own first impressions of the site, Graeme started to feel queasy about his investment. He was relieved to see Allan, the CEO, striding toward them. Surely this man would ease his concerns.

You couldn’t miss Allan. His crisp linen suit, silk cravat, black shoes with beige spats and straw boater made him look like the gent who guessed your weight at the carnival. Graeme recognized the flamboyant attire as a common status symbol for nouveau riche oilmen. A little flashy for the investor’s taste, but he didn’t mind — he knew guys like Allan were tough enough to use gasoline for aftershave. Graeme looked for passion, not fashion, in a CEO.

“Quite the operation you got here,” Graeme greeted Allan, noting the executive’s firm handshake.

“Before you know it, this well here will be gushin’!”

Allan sounded a lot like his pitch man, Graeme noted skeptically.

The engine’s banging metal, creaking wood and puffing steam distracted the threesome for a moment, but they snapped out of their reverie when the rig hand stepped from behind the shed. In grease-stained flannels and a moth-eaten hat, he was the only person who looked like he belonged on the site. Allan waved him over.

“Fellas, this here is Jake. He’s the one who really runs the operation.” Allan chuckled.

As Jake reached out to shake hands, a grinding squeal sounded from the engine. Letting loose a stream of Anglo-Saxon, he swiftly turned and yanked some levers, oblivious to the grease splattering his shirt.

For Graeme, the sight of Jake wrestling the rig works was an entertaining contrast to Allan’s Rockefeller act. The term “tough guy” didn’t do Jake justice. Graeme could easily imagine this foul-mouthed driller smoking a cigarette rolled out of coal.


In grease-stained flannels and a moth-eaten hat, Jake was the only person who looked like he belonged on the site.

Guys like “Allan” and “Jake” had their work cut out for them in the late stages of Waterton’s development. They had to keep investors interested despite richer plays to the north, all while dealing with aging technology.

Fred, Graeme and Allan started up the hill, away from the noise.

“We’re planning to drill at least a thousand feet, Graeme,” Allan declared. “Thirteen years ago, wells around here were flowing three hundred barrels a day from a zone starting at one thousand twenty. At the rate we’re pounding out the rocks, we should be at target in” — he clicked his tongue as he made the calculation — “about a month.”

Fred, spotting another chance to sell, jumped in. “Notice the rig is burning coal in the steam engine? It’s cheap and plentiful. We pick it up from nearby mines. It might even be comin’ from one of yours, Graeme.” He grinned and winked.

Put off by the over-familiarity, the visiting investor glared at both men. “Can’t say I’m thrilled. You’re using my fuel to explore for a competitor,” he said matter-of-factly. “But I’ll adapt and make money on both ventures.”

Fred and Allan nodded in support. They knew why Graeme didn’t find this funny. Diesel engines were starting to take over from coal-fired steam engines, especially on ships and trains. Graeme’s coal mines were vulnerable.

“Listen, I’m not scared of change. I’m not scared of investment risk. I love both. Put them together, you can make a lot of money. But what kind of two-bit operation are you running here?” Graeme shrugged. “Why use this old cable-tool rig that bashes the rock with a spike? If you had a more modern setup, you could drill two holes with my money, instead of just one.”

Allan’s cheeks flushed under the criticism. “This site —” he blurted.

“— landed in your lap,” Graeme interjected. “You got the grandfathered drilling rights, and you’re kidding yourselves if you think those’ll last forever. Hell, you could lose ’em tomorrow if you keep making this mess.” Graeme stabbed a finger toward the carelessly strewn barrels. “I don’t want to lose my money because of more government regulations.”

Graeme’s voice notched up along with his irritation. “Besides, word is, there are better prospects north in Turner Valley.” He paused, hoping for a response, but when none came, carried on. “I don’t see any opportunity to scale here. This is a national park!”

The CEO’s cheeks grew redder.

Fred cut in before Allan spoke his mind Jake-style. “You’re right, Graeme. Rotary drilling is the next big thing. But this rig was ready to go, it’s paid for, and we’ll get the job done. Once we’re producing oil, we’ll have cash. We bring in fancy new tools — costs go down, production goes up! And we’ll clean this place up, right, Allan?” He patted Allan on the back. “We’ll get a fellow on the Turner Valley play. Winner takes all, Graeme. You can’t say fairer than that?”

The investor could see he wasn’t getting through. Fred and Allan forced thin smiles as he gestured dismissively at the rig.

“Here’s the rub: I get annoyed when I see my money funding high-cost, antiquated operations that’ll go the way of the candle. Whether it’s drilling for oil, or mining for coal, or building horse carts or … windmills!” He hauled back and kicked at another rock. “Doesn’t matter if you’re in yesterday’s tired business or have your finger on the doohickey everyone’ll be using tomorrow. You’ve got to lead change, drive down costs. If you don’t, you’ll lose a lot of money. A lot of my money.”

Graeme’s words echoed through the valley.

Allan cleared his throat. “We’re on it! You have my word, sir.” Brushing dust from his spats, he offered, “Why don’t I give you a proper tour?”

As they walked back down, Allan pointed out the rig mast and began outlining their grand plans for the operation.

Graeme had to admire their optimism, but his lecture had obviously fallen on deaf ears.


“What kind of two-bit operation are you running here?”

Related Vignettes

ONE GREAT BIG OPPORTUNITY

It was fun to make-believe Graeme, Fred, Amy and Esther, not to mention dapper Allan and salty-tongued Jake. The real identities of the people in the photo are anyone’s guess, but, given what I know about oil and gas finance, I’m probably not far off on their roles.

Besides, my story isn’t complete fiction.

In the late 19th century, entrepreneur John Lineham saw oil seeping from the ground by Cameron Creek, which cuts through the spectacular southern Alberta valley close to where the photo was taken. Raising money and mobilizing equipment, Lineham’s Rocky Mountain Development Company drilled its first well in 1902. At 1,020 feet, its rig struck oil and produced a very respectable 300 barrels a day — at first.

The promise of riches, from the original well and those that followed, evaporated quickly. Production from the company’s last well, drilled in 1905, withered. Other companies had similar lack of luck in the area. Oil City, the resource town that had started to develop around the boom, was abandoned.

However, dreams of the region’s big oil gushers didn’t fade easily.

A decade later, the Original Discovery Oil Company chased those dreams with hyperbole. Chalking up earlier failures to Rocky Mountain Development Company’s lack of precaution and funds, Original Discovery claimed in its prospectus that it was “in a position to offer to the shrewd and careful speculator One Great Big Opportunity.” The recently opened Alberta Stock Exchange was a boon for high-risk companies and stock promoters like Fred — in 1914, Original Discovery raised a then-staggering $1 million through its public share offering. My reading of the prospectus suggests it was that same million dollars that financed the drilling operation in my photo.


Dreams of the region’s big oil gushers didn’t fade easily.

Despite evidence the Waterton area offered scant oil resources, Original Discovery Oil Company’s 1914 sales pitch for the new venture raised $1 million.

You won’t be surprised to hear that Fred and Allan’s smooth words proved unfounded. For all the reasons Graeme observed, the Original Discovery Oil Company was a money-losing proposition. Waterton never delivered meaningful quantities of oil. The million dollars frittered away to nothing, and the well was abandoned in 1920. Modern rotary rigs and Turner Valley to the north were where the real money was made.

After immersing myself in the past, I pulled out photos from my own field trips. Fred and Allan’s antique operation paled beside my modern images of giant metal rigs adorned with hefty hydraulic machinery.

As I contemplated both how much and how little the industry has changed, I imagined the same scenario playing out a century later …

“Nice car.” Fred patted the dashboard of Graeme’s new electric vehicle. “The ride’s so silky smooth and quiet.”

“Thanks.” Graeme smiled proudly. “These babies are the future of transportation, you know.”

Amy leaned forward from the back seat. “Our daughters love riding in it.”

“I bet they do,” Fred chuckled. “I feel like a kid myself.”

“Well, theirs is the generation that will champion this technology,” Amy mused. “By the time they’re our age, every wheel in the world could be turning thanks to electricity.”

Fred nodded slowly, only half listening. “Here’s the exit — should take us to the north side of the oil field. The drill site is just off the highway.”

Graeme guided his vehicle onto the exit ramp. “Let me level with you, Fred. Amy and I are reluctant to invest any more in oil and gas.”

“Electrification and fuel economy — that’s the future,” Amy opined.

Fred scratched a bony knob behind his ear, considering her words. “I know. But I promise you’ll be impressed with this operation. The equipment may be a bit long in the tooth, but next year, we’ll have high-productivity, low-cost pad drilling in place, giving us incredible economies of scale. We’ll be cost-competitive with any energy system, old or new. That’s a guarantee.”

“I’m glad to hear it, Fred, because I get annoyed when people use our money to fund high-cost, antiquated operations on the tail end of change,” Graeme snipped.

“And trust me,” Amy added, “if Graeme makes a bad investment, he hears about it from me.”

“Never marry your business partner,” Graeme joked.

“Well, just wait till you’re on the floor of the rig, looking up at that mast,” Fred persisted. “You’ll see.”

Growing impatient with Fred’s sales pitch, Amy rolled her eyes and continued Graeme’s lesson. “Doesn’t matter whether it’s drilling oil or installing wind turbines or solar panels. You need to lead change and mind your costs, or you’re going to lose a lot of money.”


“Electrification and fuel economy — that’s the future.”

At those words, I snapped out of my daydream.

Reflecting on the fictitious financiers’ comments — past and present — I nodded instinctively. The Graeme and Amy types I’ve met in business echo my own experiences as an investor: overzealous management that relies on waning technology is always a bad bet.

A look up the mast of a modern drilling rig. As the rotating drill bit grinds deeper into the earth, these pipe segments are removed from the rack and screwed into the “string.” Like steel spaghetti, the drill pipe snakes down to the layer bearing oil and gas, often several kilometers deep.